203.
Star Recreation receives $48,000 cash in advance ticket sales for 12 home games. Record
the advance ticket sales on April 30. Record the revenue earned for the first home game
played on August 14.
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204.
On January 31, Ransom Company’s payroll register showed that its employers earned
$30,320 of office salaries and $82,750 of sales salaries. Withholdings from the employees’
salaries include FICA Social Security taxes at the rate of 6.2% on the first $118,500 of
earnings per calendar year, FICA Medicare taxes at the rate of 1.45% on all earnings,
$16,960 of federal income taxes, $3,350 of medical insurance deductions (which
represents 50% of the total cost of the employee medical insurance), and $4,210 of 401(k)
retirement contribution deductions. Ransom Company pays the other 50% of the employee
insurance cost and matches the employee 401(k) contributions. Several employees earned
more than $7,000 for the period which reduced salaries subject to unemployment to
$104,000. No employees exceeded the FICA-Social Security taxable wage base.
1. Prepare the journal entry to record Ransom Company’s January 31 payroll expenses
and liabilities.
2. Prepare the journal entry to record Ransom Company’s employer payroll taxes resulting
from the January 31 payroll. Ransom’s merit rating reduces its state unemployment
(SUTA) to 4% of the first $7,000 paid each employee. The federal unemployment tax
(FUTA) rate is 0.6%.
3. Prepare the journal entry to record Ransom’s additional employee expenses.
205.
General Co. entered into the following transactions involving short-term notes payable.
On May 14, General purchased $40,000 merchandise from Steller Co., terms are 2/15,
n/30. General uses the perpetual inventory system. On May 29, General replaced the May
14 account payable with a 60-day, $36,000 note bearing 8% annual along with paying
$4,000 in cash. On July 28, General paid the amount due on the note at maturity.
Prepare journal entries for all the preceding transactions and events.
206.
Drake Company pays its employees for two weeks of vacation each year. The total annual
cost of the vacation benefit is $109,920. Prepare the journal entry to record the monthly
accrued vacation expense.
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207.
Hollow Company provides you with following information for two of its employees. The
company is subject to the following taxes.
Tax
Rate
Applied To
FICA—Social Security
6.20%
First $118,500
FICA—Medicare
1.45%
All gross pay
FUTA
0.60%
First $7,000
SUTA
3.20%
First $7,000
Compute amounts for each of these four taxes as applied to each employee’s gross
earnings for November.
Gross Pay through October
Gross Pay for November
a.
$6,400
$2,000
b.
$112,000
$9,400
Security
FUTA
0.60
SUTA
3.20
Wages Subject to Tax
208.
Deacon Company provides you with following information related to payroll transactions
for the month of May. Prepare journal entries to record the transactions for May.
Office
Salaries
Sales
Salaries
Social
Security
Taxes
Medicare
Taxes
Federal
Income
Taxes
$38,000
$26,000
$3,968
$928
$5,600
a. Record the May payroll using the payroll register information given above.
b. Record the employer’s payroll taxes resulting from the May payroll. The company had a
state unemployment tax rate of 3.5% of the first $7,000 paid each employee. Only $42,000
of the current months salaries are subject to unemployment taxes. The federal rate is
0.6%.
c. Issue a check to Reliant Bank in payment of the May FICA and employee taxes.
d. Issue a check to the state for the payment of the SUTA taxes for the month of May.
e. Issue a check to Reliant Bank for the first quarter in FUTA taxes in the amount of
$1,020.
209.
On June 18, Sparks Company purchased $25,000 merchandise from EquipCo. Sparks uses
the perpetual inventory system. On July 19, Sparks was unable to pay the account in full.
Sparks paid $13,000 in cash and EquipCo accepted a 60-day, $12,000 note bearing 4%
annual for the remainder. Sparks paid the amount due on the note at maturity.
1. Determine the maturity date for the note.
2. Prepare journal entries for all the preceding transactions and events.
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210.
Richardson Fields receives $31,680 cash in advance ticket sales for 11 home soccer
games. Record the advance ticket sales on March 31. Record the revenue earned for the
first game played on August 17.
Fill in the Blank Questions
211.
Obligations due within one year or the company’s operating cycle, whichever is longer, are
________________________.
212.
_________________ are probable future payments of assets or services that a company is
presently obligated to make as a result of past transactions or events.
213.
______________________ are amounts received in advance from customers for future
products or services.
214.
______________ are amounts owed to suppliers for products or services purchased on
credit.
215.
A ___________________ is a potential obligation that depends on a future event arising from
a past transaction or event.
216.
Contingent liabilities are recorded in the accounts if the future event is _______________
and the amount owed can be _______________.
217.
Banks authorized to accept deposits of amounts payable to the federal government,
including amounts due for payroll taxes are _________________________________.
218.
A _____________________ shows the pay period dates, hours worked, gross pay,
deductions, and net pay of each employee for every pay period.
219.
Times interest earned is computed by dividing income before interest expense and income
taxes by _______________________.
220.
The difference between the amount borrowed and the amount repaid is referred to as
_______________.
221.
A _______________________ is a written promise to pay a specified amount on a definite
future date within one year or the company’s operating cycle, whichever is longer.
222.
The total compensation an employee earns including wages, salaries, commissions,
bonuses, and any compensation earned before deductions such as taxes is called
___________________.
223.
Gross pay less all deductions is called ____________________.
224.
The more _______________________ allowances an employee claims, the less federal
income tax the employer will deduct from pay.
225.
Employer __________________ are an added employee expense beyond the wages and
salaries earned by the employees.
226.
A _____________________ is a seller’s obligation to replace or correct a product or service
that fails to perform as expected within a specified period.
227.
Vacation benefits are a type of _______________ liability.
228.
To compute the amount of tax withheld from an employee’s pay, employers can use a
__________________________ table.
229.
Companies with many employees often use a special ____________________ account to pay
employees.